Shutdown of Nanyang shoe plant to hit Seacon revenue

business November 12, 2011 00:00

By Sucheera Pinijparakarn
The Na

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Seacon Group expects its revenue this year to drop by 10-15 per cent from Bt6 billion last year after its Nanyang footwear and Thai Churos monosodium-glutamate businesses in Bangkok were affected by floods.

The group has five business units: construction, retail, hotels, food manufacturing, and consumer products.

Its plant manufacturing Nanyang school shoes and sandals in Bang Khae had to suspend production because of supply-chain and logistics problems, said Piya Sosothikul, executive director of Seacon Group.

The supply chain for Nanyang shoes begins in Ayutthaya province, which has been badly swamped by the flood. The situation has cut Nanyang’s production capacity of 3.5 million units by 30 per cent, so sales revenue will also drop by at least that percentage.

He said the Nanyang plant should get back to full production capacity this month to prepare for the back-to-school period in May.

Nanyang contributes 10-15 per cent of the group’s revenue, he said, so when its suspension is combined with lost revenue from Thai Churos and reduced residential construction, total revenue this year is expected to drop by 10-15 per cent.

Piya expects there to be a shortage of school shoes when the term opens, a period that normally accounts for about 70 per cent of Nanyang revenue.

Despite the expected shortage, however, the company will be able to maintain the current prices of Nanyang shoes thanks to the lower price of rubber, at Bt95 per kilogram from Bt130 previously.

The group’s Thai Churos MSG plant is also in Bang Khae and has also been affected by the flood disaster.

Piya said that although the flooding had not affected Seacon Square Bangkae much, the company needed to repair the mall’s underground section. Therefore, its scheduled opening in March will have to be delayed to June. The shopping mall is operated by Seacon Group’s property arm, Seacon Development.

He noted that even though the home-repair business will be boosted once the floods recede, the group has no plan to shift focus to repairs because of the lower margin compared with home construction.